Japan`s Rise Essay, Research Paper

Japan is one of the world’s leading economic powers when concentrating on its

Gross Domestic Product of four point two trillion United States dollars. Its

economy is only second to the United States in terms of production. However,

Japan has not always contained a relatively strong economy. The Japanese’s

economic strategies have boosted economy to new heights since its fall during

the second world war because of their unorthodox manner of business etiquette,

innovative strategy, and strong relations with stable economies such as Canada

and the United States. The rise to the top did not occur without a large

struggle as many problems did occur after the Second World War left Japan

economically devastated. Japan’s journey has left them at the present with

recession conditions. Following world war two, Japan’s economy was absolutely

devastated. From 1937 to its defeat in 1945 Japan poured all of its strength

into the war. The industrial sector was diverted into a swollen military

production sector. The strongest and swiftest workers were placed in the

military, and quite often sent to die on the front lines of the war. The

citizens who stayed in Japan often worked in military factories, and faced the

constant threat of air raids. Once the war was over there was not a need for the

military industries that were created and a thick number of four million

citizens became unemployed. The new unemployed total had then reached thirteen

point one million people. After the war Japan was on the verge of bankruptcy in

its international payments. The trade deficit had expanded drastically and the

balance of payments equilibrium was completely destroyed. Since Japan was

allocating all of its resources into the war and to begin with was not a country

with many raw materials they had no choice but to import an excessive amount of

raw material in order to produce military hardware. Even so, the war did award

JaPan with some benefits. The industries developed during the war became the

major postwar industries, such as the steel and transportation industries.

Wartime technology was reborn during the postwar as Japan became one of the

world’s leading countries in the technology industry. Japan’s technology

advances made it more competitive. These technological developments included

advancements in the production of steel by utilizing new technologies. The

increase in electrical power produced by the Sakuma dam, as well as increased

technologies in the area of shipbuilding; automobiles, electrical machinery,

sewing machines and cameras helped put Japan on a path to being more

competitive. Through massive restructuring and the creation of niche markets

such as Mitsui mining being split up into Mitsui coal mining and Mitsui metal

mining, Japan was able to establish a base for its future economy. The Japanese

have a very different method of thought from everyone else in the world. In the

beginning of this century, Japan lost its ability to feed it citizen’s and began

to panic. They had money to import food however, due to their morals they would

rather conquer than pay money and give in. The country comes together as one to

try to gain control as a nation. There is very little if any competition among

Japanese companies when it comes to the foreign market. Japanese corporations do

practice a form of conventional economic competition, but all within their own

borders. This is what is known as the "one set" philosophy. Each

company produces a set of various products. For example, all beer companies

produce a lager, and draft and a dry beer. This is only inside Japanese borders.

Economists state that it is impossible to specialize in everything, but the

Japanese have an urge to be on the top in every field. Even in the schools

children are pressured to be the best. It is a very competitive environment and

if they can not cut it their career goals will not be anything but an

ever-lasting dream. The whole society is based on being the best at what ever it

may be. Although recently the new younger generation is shifting towards a

conserver society, less work and more play is the credo for this new breed of

human beings. Married couples as well as single, free thinking individuals are

no longer willing to let their jobs consume their lives, they take two day

weekends and escape to quite places like a beach. The Americans complain about

declines in their steel industries but few Americans believe that it is a

problem to import CD players and TV’s. The United States government does not

have any form of a plan to create a domestic CD player or anything of the sort.

This is where the Japanese are different from the rest of the world. The key is

that within the country of Japan companies, and corporations competitive with

each other or not they stick together to ensure the success of their country;

the United States on the other hand does not compete with the rest of the world

as one for it is the companies and corporations that compete individually

representing the United States. As well, the Japanese capacity to produce high

quality products is very emphasized in the world market. This is what permits

them to ask themselves why import if we can produce a higher quantity with a

better quality for a cheaper price? For example in 1985 a Boeing 747 crashed

into a mountainside while flying from Tokyo to Osaka. The plane was purchased

from the United States and the crash was due to a faulty repair job performed by

Boeing engineers. I quote from a Japanese pollster, Takayoshi Miyagawa,

"the Japanese people think we should make by ourselves whatever concerns

human life." Another case in which Japanese pride is well demonstrated is

when the space shuttle the Challenger exploded. For a year afterwards the

Japanese repeatedly said, "if we had built it; it would not have

happened!" This goes to prove how highly the Japanese’s think of their

craftsmanship. However, in 1988 they refused to use an American vaccine, which

protected children against measles, mumps and rubella all in one vaccine. The

Japanese Ministry of Health and Welfare instead coordinated three of the

country’s vaccine making companies to produce an alternative to the American

vaccine. The Ministry made it mandatory to be vaccinated. The refusal of

importing the American vaccine caused much grief. The American version had

little if any side effects but the Japanese version caused outbreaks of

meningitis c causing death and paralysis. Once these outbreaks were reported the

vaccine was not mandatory but optional. Still this just goes to show the

different ideals of Japan. In short the Japanese and even the whole east of Asia

believes that the inconvenience of importing to the consumer is less damaging in

the long run than the weakness of a nation’s productivity base. This truthfully

explains the Japanese and East Asian mentality. The idea of the invisible hand

is one ideology brought on by the decesed capitalist Adam Smith. He stated that

there should be no government intervention in the economy. The producers of

Japan Produce goods for the people who buy certain products which appeal to

them. Adam Smith said that the producers would have to adapt to consumer needs

since the consumer will only purchase what they want to. Therefore, the economy

will take care of itself through guidance from the consumer, hence a consumer

run society. Adam Smith’s theories are very much a reflection of Japan’s

economy. The Japanese Canadian Relationship began with aspiration of exports to

Japan, development and increased efficiency in Canadian agriculture, industrial

and fishery sectors. The overall incentive was the growth of national income

through better, more profitable and more certain export opportunities. Canadians

viewed the trade agreements as an opportunity to improve productivity and

competitiveness abroad and at home. Canadians had two main goals for the

agreement; to secure a substantial further reduction in the level of foreign

tariffs facing our exports and to reduce and bring under control NTB’s

inhibiting Canadian exports. Canada reduced protection on industries to boost

efficiency and lower consumer costs however kept protection where it was still

needed. The results of the agreement yielded a comparable reduction of Canadian

tariffs- forty percent of Japanese, United States and EEC tariffs together

helped along with comparable reduction of Canadian tariffs. Agreements were made

to instate international discipline to government procurement policies. The

biggest gain of the conference for Canada was with United States exchange of

tariff concessions. A deal with the United States was made that stated that

there must be an injury to their economy as a precondition to imposing

countervailing duties. What Japan gave us were tariff reductions in machinery,

chemicals, automotive and transportation equipment. There was another agreement

signed covering subsidies, countervailing duties, government procurement,

technical barriers to trade, import licensing, (clear publication of procedures

and simplified administrative practices) customs valuation and dumping. The

agreements also brought into perspective future opportunities for both

countries; one which was optimistic. Tariffs and other trade barriers are in the

process of being reduced, and improved framework for international trade

co-operation through numerous agreements was falling into place, less trade

restrictive measures were being used by governments, and there was greater

transparency in the system and less uncertainty for the business community. Due

to the transparency in the Japanese market, Canada’s role in the Japanese

economy became one of the largest consumers of machinery, cars, steel, and

electronic products. Canada also plays the role of supplier of raw materials to

Japan. Canada sells natural resources to a quickly expanding country with ever

expanding needs for raw materials with which to fuel their thriving industrial

sector. Canada’s exports to Japan include lumber, wheat, corn, and products that

are land intensive. Arable land in Japan is scarce and extremely expensive and

fifty-six percent of the forest area is privately owned. The land that is used

is very commonly on steep hills, where decades of reworking the soil has left it

in stages of plateaus on which rice patties and farmland are held. The arable

land is divided into many small farms averaging three point five acres in size.

Most of the land is over used since the farmers overwork it trying to get as

much out of as possible. Thus, Japan must rely on outside sources of agriculture

to supply its people with the necessary products such as wheat, corn, and other

grains. Canada’s position directly across the pacific from Japan made it a

variable partner for trade in these commodities. The USSR is in closer proximity

with Japan; however, political differences and problems made Japan view the USSR

as an extremely unstable and undependable source of agriculture. As Japan

drastically increased its capacity to produce and to consume, it became a major

part of the worldwide economy. However, as strong as the Japanese is, it is

nonetheless susceptible to problems. There is a current recession in Japan

caused by many factors, one of them being fiscal tightening representing an

increase in government revenues and decreasing government expenditures. Other

factors contributing to the Japanese recession included Asian economic

turbulence and a Japanese banking system deprived of strength. The magnitude of

the fiscal tightening was too large for the Japanese economy. Japan was not able

to absorb the fiscal tightening due to the economic crisis in some Asian

countries and because of the failure of major financial institutions. After

nearly four years of expansion from1987 to 1991, the Japanese economy went

through a recession starting in 1991 and lasting for thirty-two months. This

recession ended in March of 1993. The recession of 1991 to 1993 was the second

largest recession in the postwar period. The government made efforts to

reactivate the economy and introduced seven fiscal stimulus packages in four

years from 1992 to 1995. The Bank of Japan cut the bank rate to 0.5 percent in

1995 and has since kept it at this record low. The government undertook a major

tax reform in 1994 and cut income taxes through the tax schedule and through

increases in standard personal and employment income deductions. Therefore by

decreasing revenues the government attempted to promote spending. As a result

the national debt increased by about six percent of the Gross Domestic Product.

Another reason for this increase in debt was that the private sector was

unresponsive to the stimulus. One of the reasons for sluggish business

investment within Japan was due to the unstable nature of the economy and a thus

a flight of capital to the United States and other stable markets. Manufacturing

industry investments increased during the 1995- 1996 period, which was a sign to

economists that the economy was back on the path of self- sustaining expansion.

However the investment boom which was confined to a few machinery sectors was

sort lived. Investments by construction and real estate firms continued to

decrease, dragging down the economy. These private sector companies were

increasingly investing their capital abroad in the form of direct investments

which was leaving less and less money being inside Japan to stimulate

production, increase jobs and therefore increase the money supply. To worsen the

situation, a significant increase in import penetration observed from 1993 to

1995 was snuffing out domestic production. The decreasing amount of household

consumption in the 90’s reflected the weak state of the economy. Unemployment

grew, which raised concerns about job security and reduced people’s willingness

to consume. Weak demands for goods and services began to affect employment.

Employment in manufacturing started to fall; however the difference was absorbed

by the construction industry which soon became overloaded. The construction

industry soon followed suit. The unemployment rate reached high national levels.

Due to corporate restructuring as well as other factors, male labor unemployment

grew forcing the women of the households to try and find jobs, which was

contrary to traditional values illustrating the severity of the situation. As

the Japanese economy struggled to rise from the ashes, it built itself an

economy based on technology, which is evident especially in the machinery,

transportation and steel industries. In addition, Japan is one of the world’s

leading research platforms for new technologies in robotics and electronics,

making Japan a self-sustained ever-expanding country. Japan has stayed on the

leading edge of the world riding a wave of technology, which will definitely

carry it into the next millennium. Broad-based technological firms combined with

innovative, even unorthodox, business strategies are the supporting columns of

this immense notion. It is very possible for the Japanese people to overcome the

conditions brought upon by the recession through the policies they have adopted,

different from our own, and become the number one leading country in Gross

Domestic Product. This would put Japan in the spotlight of the rest of the

world, and maybe then, we will begin to consider many of the different ways they

do business.